Revenue Management A Business Strategy That Involves Applying The Rational

Revenue Management A business strategy that involves applying the rational to business behaviour = operational decisions are taken on the basis of envisaged goals or targets. What do we want? • Efficency • Cost Reduction PLUS • Customer Service • Choice • Quality • Flexibility

(of course!)

PAST DILEMMA Management strategy was rare - most management was 'fire fighting' TODAY Business Strategy = an all encompassing corporate philosophy The Customer

The Organisation

The Employees

The Rational and Irrational in Business The Organization But business success is not always a rational process. Success = a product of chance, location, time, demand, free thought ….. But also Information flows, financial monitoring, people management, marketing….. SO The IDEAL strategy links all the above but not in a mechanical way, but as a decision making support system. 'What can we use data for next?' (Paul Dermody DeVere Hotels)

Example Tactics • Control Guest Mix • Track Room Inventory • Set Restrictions/Be Flexible (Save product for the right guest, min. rates, packages, upgrades, discounts etc….) BUT This cannot be done without Information YIELD =

Revenue Realised Revenue Potential

Terms:

RevPar Hurdle Rate Floor Rate Ceiling Rate Discount Allocations Capacity Management Duration Control RevPOR/RevContPAR

So let’s make some decisions

1. Small Case Studies (Qualitative Information) 2. Displacement Exercises (Quantitative Information)

INFORMATION REQUIRED BY YIELD MANAGEMENT SYSTEMS: • Booking Patterns • Demand Patterns • Overbooking Policy • Price Changes and Effects • Customer Information - integration with PMS, CRS/GDS (Property Management System) (Customer Reservation System) (Global Distribution System) • Guest/Hotel Relationship • Other Revenue Departments Involvement • Types of Forecasting